Johannesburg — ONCE listed on its own exchange, the JSE could be a takeover target for global exchanges hungry for new opportunities.

"We could, of course, be exposed to a bid," said JSE business development manager Noah Greenhill, who was talking yesterday about the June 5 listing of the stock exchange.

Some companies, when going public for the first time, make sure that a substantial number of the shares in issue are in "safe" hands to protect against unwanted bids. But the JSE does not have this option.

"We can't preclude an unfriendly shareholder making a bid for the JSE or put shares in friendly hands because our stock is already trading over the counter," said Greenhill.

"From a South African perspective, who wouldn't want to buy in? We are the biggest exchange in Africa."

Investec Asset Management analyst Chris Steward, who has researched the JSE's listing, said that "in theory Investec Asset Management is interested but in practice the share has had one hell of a run and is starting to look quite full on a valuation basis".

Many asset managers have not been able to buy JSE shares because they are mandated to trade only in listed products.

The JSE has not yet done a road show to sell its share issue but fund managers appear keen to want to know more.

Rob Nagel, head of equities at African Harvest Fund Managers, said his firm would have a good look at the JSE before it listed.

"But we still need to kick the tyres," Steward said. Neither he nor Nagel had been approached by the JSE to talk about the listing.

The JSE will be a small-cap stock, probably taking a place on the general financial sub-index of the local bourse.

Its market capitalisation yesterday was about R1,8bn, which, on an absolute basis, would not be expensive for a bidder dealing in dollars, euros or pounds.

"The JSE could be viewed as a target," Steward said.

"I don't necessarily think that's a bad thing. If the activity levels in the market can be maintained, then it's not a bad thing."

Like any other company in SA, the JSE cannot, in terms of the codes of the Securities Regulation Panel, create structures that would preclude a bid from another party, wanted or not.

But, in terms of the Securities Services Act, no one can hold more than 15% of the JSE without ministerial permission.

"The prospect of another exchange bidding for the JSE is exciting but it makes people nervous," said Greenhill.

There are about 8-million JSE shares already trading over the counter. They have more than doubled in value in the past year and were at R217 yesterday.

"There has been a shift into a competitive realm," said Greenhill, commenting on the fast and furious activity around the globe as exchanges seek ways to grow.

The most sought-after exchange of late has been the London Stock Exchange (LSE), with five unsuccessful suitors since 2000. Greenhill says the good thing about the bids for the LSE had been that they came in at significant premiums. The same could be true of a bid for the JSE.

And a bid would not necessarily be hostile. The JSE and the LSE have created a close working relationship in the past four years.

It has been mooted that the two would do well to further cement those ties through a merger of sorts.